FIRST HALF 2020 RESULTS
FIRST HALF 2020 RESULTS Foreword Since Oct. 1 st 2019, some contributions to customers (previously included within the financial charges section of the Profit & Loss scheme) were treated as commercial premiums, hence netting revenues. However, for comparative purposes, in some cases, the figures herein presented may be "norm normalize lized", i.e. reported on a comparable basis with those of the previous year, hence excluding the effects deriving from the change of treatment of the financial discounts. 2
FIRST HALF 2020 RESULTS Definitions & assumptions In this presentation: • Adjus juste ted stands for “before non recurring items and inputed costs of the stock option plan ” • ForE rEx or FX FX stand for Foreign Exchange Rates; • “ M ” stands for million and “ bn bn ” stands for billion. • Norma rmali lize zed stands for excluding the change of treatment of the financial discounts; • Orga ganic ic stands for net of Foreign Exchange Rates and hedging derivatives effects; • Q2 stands for second quarter (March 31 st – June 30 th ); • H1 stands for first half (January 1 st – June 30 th ); • Report ported stands for official data including the application of IFRS-16 accounting standard and the change of treatment of the financial discounts. 3
CONTENTS • Update on COVID-19 • First half 2020 results
FIRST HALF 2020 RESULTS Our key priorities to keep the business afloat Product ction on & Supply Chain: n: keeping ping the busine iness fluid id People & Financi ncial Communi unity: y: soundne dness ss: safe fegua guarding rding providing viding the people ople's health lth require quired d resource ources Distr tributio bution: n: improving roving custom tomers rs' journe rney 5
FIRST HALF 2020 RESULTS Main actions taken to overcome the outbreak effects New customer omer experien erience. ce. • consum nsumers ers Enhancin ncing e-commerce ommerce strategy. ategy. • Flexible xible shifts ts in productio uction sites. s. • peop ople le Flexible xible worki king ng practic ctices es in office. ce. • Cost control rol of general ral expens enses. es. • profi ofitabil tabilit ity Reducing cing and optimizin mizing merchan chandi disin ing costs • Lower er travel vel expenses. enses. • 6
FIRST HALF 2020 RESULTS Our production activities during the 1 st half Janua nuary ry Febru bruary ry March rch April ril May June ne Italia lian platfor form Romania nian platfor form Chine inese platfor form • Thanks to the well diversified production platform, the Group has been able to overcome the difficulties faced over last months. • Moreover, flexible shifts have been implemented in order to maximize the Full capacity production capacity utilization . Temporary stop 7
FIRST HALF 2020 RESULTS Digital activities to enhance the customer experience Increasing the geographical coverage of our proprietary e- commerce Enhancing the consumer journey through our websites describing brands and products New digital strategy to simplify GO-to-MARKET leveraging on “where to buy” solution toward our trade partner Digital marketing capabilities to secured a more personalized and timeline consumer communication 8
CONTENTS • Update on COVID-19 • First half 2020 results
FIRST HALF 2020 RESULTS Highlights (half year normalized ) Strong trend in sales in H1, thanks to Strong trend in sales in H1, thanks to +6.9 % revenues' growth % robust performance of Coffee and a robust performance of coffee and Food over the last Q food over the last quarter Margin expansion to 13.2% sustained Margin expansion sustained by strong adjusted Ebitda growth % +21.5 % by strong volumes and favorable price- volumes and favorable price-mix mix Solid cash generation by virtue of Solid cash generation by virtue of 6 months cash generation 110 M€ operating profit and a record operating profit and a record performance of the working capital performance of the working capital Cash-rich position that leaves ample Cash-rich position that leaves ample Net Financial Position 388 M€ room to manage growth in a difficult room to manage growth in a difficult time and for strategic developments time and for strategic developments 10
FIRST HALF 2020 RESULTS The topline 1st Half (Jan. 1st - June 30) 2nd quarter (April 1st - June 30) 1st Half 2020 2020 2020 2020 2019 2019 (Eur million unless otherwise "normalized" "normalized" specified Revenues 896.6 903.7 845.5 507.3 469.1 change % 6.0% 6.9% 8.2% organic ch. % 6.7% 8.5% In the first half the normalized revenues grew by 6.9%, soaring by 8.2% in the second quarter; All regions, excepted MEIA, were in positive territory, with South-West Europe and APA growing double-digit; Revenues have been benefited by strong rebound of household appliances and food, in addition to increasing commitment in A&P. 11
FIRST HALF 2020 RESULTS Revenues by region Half Year organic Q2-2020 organic EUR million 2020 2020 chg. % chg. % chg. % normalized chg. % normalized South West Europe 374.6 12.1% 11.8% 201.0 12.0% 11.6% North East Europe 237.5 5.1% 5.5% 126.0 6.3% 8.4% EUROPE 612.1 9.3% 9.2% 327.0 9.7% 10.3% MEIA (MiddleEast/India/Africa) 44.9 -26.4% -27.0% 24.8 -26.5% -26.5% APA (Asia/Pacific/Americas) 246.7 10.0% 9.5% 155.5 13.3% 13.2% TOTAL REVENUES 903.7 6.9% 6.7% 507.3 8.2% 8.5% Organic performance in the first half (at normalized level): the Sout uth-We West Eu Europ rope region grew by 11.8%, thanks to the remarkable expansion of revenues in Germany and France; positive contribution from all other countries, except for Italy that has faced severe effects from the lockdown, but recovering in Q2; Nort No rth-Ea East Eu Europ rope was up 5.5%, supported in particular by the double digit growth of Benelux and Scandinavia; in positive territory also Poland, UK, Russia, Ukraine & CIS; APA grew by 9.5% (organic), boosted by Australia & New Zeland and China & Hong Kong (all up APA double digit); US & Canada recorded a positive growth in both the half year and the quarter; MEIA EIA region confirmed the negative trend of the first part of the year and in Q2 as well, due to a tough economic environment and the effects of pandemic on purchasing power. 12
FIRST HALF 2020 RESULTS Revenues by market ( normalized ) Russia, Ukr. & CIS 7.1% MAIN ORGANIC UPS & DOWNS others SW_EU others NE-EU 11.2% 14.7% Germany France, Benelux UP DOUBLE DIGIT UK Australia, New Zeland, 4.5% China & HK MEIA 5.0% France 7.4% H1 2020 Russia, Ukraine & CIS UP SINGLE DIGIT Poland Australia & NZ US & Canada 5.6% Germany Italy 14.1% North America DOWN Saudi Arabia 11.7% greater China Italy 4.3% others APA Japan 8.8% 2.9% 2.8% 13
FIRST HALF 2020 RESULTS Revenues by product Cooking & Food MAIN ORGANIC UPS & DOWNS Prep. 27.2% full-auto machines manual pump machines UP DOUBLE DIGIT kitchen machines air conditioning H1 2020 Nespresso machines UP SINGLE DIGIT Dolce Gusto machines Coffee Makers 47.9% hand blenders Comfort & Home food processors care DOWN portable heaters 19.3% home-care products Others 5.6% Based on management accounts 14
FIRST HALF 2020 RESULTS Margins 1st Half (Jan. 1st - June 30) 2nd quarter (April 1st - June 30) 1st Half 2020 2020 2020 (Eur million unless otherwise 2019 2019 specified "normalized" "normalized" net ind. margin 436.3 443.4 399.5 242.0 217.7 % of revenues 48.7% 49.1% 47.2% 47.7% 46.4% adjusted Ebitda 111.8 118.8 97.8 73.7 61.3 % of revenues 12.5% 13.2% 11.6% 14.5% 13.1% Ebitda 105.5 112.6 95.5 72.9 60.4 % of revenues 11.8% 12.5% 11.3% 14.4% 12.9% Ebit 66.9 74.0 58.0 53.3 41.4 % of revenues 7.5% 8.2% 6.9% 10.5% 8.8% Net Income 43.1 43.1 42.8 32.1 31.4 % of revenues 4.8% 4.8% 5.1% 6.3% 6.7% adjusted Net Income 47.9 47.9 44.9 32.8 32.3 % of revenues 5.3% 5.3% 5.3% 6.5% 6.9% In the fist half margins have been boosted by the increase in volumes and a favorable price-mix effect, albeit being slightly eroded by the rise of some operating costs, specifically A&P to support core brands, non industrial labour costs and duties in the USA; Non recurring costs related to Covid-19 amounted to 5.3 M€, of which 3.1 M€ were donated by the Group for the fight to the outbreak and 2.2 M€ were other costs partially related to the pandemic; Net income was impacted by temporary higher tax take. 15
FIRST HALF 2020 RESULTS First half adjusted Ebitda bridge ( normalized ) 2.4 8.4 12.1 27.2 among others, increases in A&P, non industrial labour costs and duties on the US market. 118.8 97.8 adj. ebitda H1 19 volumes price/mix FX other costs adj. ebitda H1 20 normalized 16
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